Stripe- The Company Vision and the Business Model

Stripe is Software as a Service (SAAS) Company based in California, USA. It was founded by Patrick and John Collison in 2011.

The company’s prime product is online payment processing solutions for businesses globally. They have now extended the product range to online billing, fraud protection, POS terminals, Business cards, and financing solutions.

Company’s Vision:

The company describes its vision as:

“Our mission is to increase the GDP of the internet”

Chart Source: Stripe.com

Stripe aims to reduce the complexities of online payment processing with an easy-to-use interface for all users. A common hurdle faced by many startups and existing small businesses is the lack of coding skills and e-commerce understanding.

Stripe’s focus remains on removing these hurdles to enable businesses of all sizes to adapt to e-commerce.

Empowering Businesses with Technology:

One of the core values described by Stripe’s founders is to help businesses with innovative use of technology. The online payment methods existed before Stripe launched.

The founders of Stripe intended to empower businesses with flexibility and wider options that could help them serve customers better.

Stripe has taken a few gigantic steps in materializing that vision of taking the commerce GDP to the e-commerce version. A blend of sophisticated and customized tools from Payment acceptance to risk management has enabled Stripe to partner with many world-leading brands.

Stripe has empowered many businesses while offering a total start-to-finish payment solution. Their unique appeal has attracted the world’s finest and leading brands like Amazon, Facebook, Remitly, Shopify, and Zoom to name a few.

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Stripe Business Model:

Stripe started with a vision of offering a tailor-made payment processing solution to businesses. Since then, Stripe has developed and offered a range of different products.

Their appeal still is large with businesses around the world for a customized online payment processing solution.

Stripe’s wide range of payments solution derives its revenue streams. Stripe offers payment acceptance, processing, reconciliation, and fraud management solutions. Their pricing strategy is based on a per-transaction basis for every app differently.

Stripe’s business model generates most of the revenue by charging customers on per transaction basis. The pricing strategy for Stripe is closely matching its competitors with a fraction of variations.

The Payment integration framework that comes with over 100 features charges 2.9% + 30¢. Additional services such as international cards and failed transactions are charged separately.

The Customer Base:

Stripe appeals to businesses of all types and sizes. Their focus is on providing customized and all-in-one payment processing solutions to corporate customers.

Their check-out solutions enabled them to partner with e-commerce building platforms like Shopify, Amazon, and Wayfair.

On the other hand, their built-in API products have enabled stripe to partner with industry leaders in the market to business and business to business platforms.

With an increasing trend of e-commerce businesses, it is safe to say the Stripe business solutions will see a sharp rise in the near future. A recent addition to their inventory of products is the “capital” app that offers unique financial solutions to businesses.

It offers advances and loans to the businesses with a fixed percentage of daily sales as repayment until the full settlement.

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The Business Valuation:

Stripe is still a privately held business since its foundation. It has attracted significant attention and investment with its investment rounds in recent years.

Currently, Stripe secured a $600 million investment that took its total business valuation to $36 billion. According to the company CEO Patrick Collison, the company holds currently a cash reserve of $ 2 billion.

An anticipated IPO of Stripe in the year 2020 is delayed with no official commitments. However, it is safe to say the company worth billions of intangible assets and global market presence will be valued much higher than its current worth.

Future Goals:

As stated in the vision statement, Stripe primarily focuses on improving the online payment mechanism globally. Their founders want businesses globally to adapt to e-commerce with maximizing potentials.

Currently, the company has an official presence in only 14 countries with partnering arrangements in well over 40 countries.

The company CEO Patrick Collison hinted in an interview recently for their plans on international expansion. The Company has also envisioned a plan of offering easier and non-conventional financing options to the businesses when they launched the “capital” app.

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